This paper examines key performance management theories and practices, focusing on Edwin Locke's goal-setting theory and Victor Vroom's expectancy theory as frameworks for motivating employee performance. It outlines the performance management cycle — including objective-setting, measurement, feedback, reward, and monitoring — and draws on Pulakos (2009) and Leeuw and Berg (2011) to support the argument that organizations applying structured performance management consistently outperform those that do not. The paper concludes with a practical application, describing how performance appraisal can be used to align individual employee goals with broader organizational objectives in an entrepreneurial setting.
Performance management is a continuous process by which an organization identifies, measures, and develops the performance of individuals. It aligns individual performance, organizational resources, and systems with the strategic goals of the organization. According to Leeuw and Berg (2011), companies that apply performance management practices generally perform better than those that do not.
The performance management cycle provides insight into how performance management systems should be implemented within an organization. Its elements include setting objectives, measuring individual performance, providing feedback, rewarding employees based on learning outcomes, and monitoring changes to objectives and activities. For performance management practices to be effective, there must be constant communication between the management team and employees, and individual goals must be aligned with those of the organization (Pulakos, 2009).
The two theories most applicable to performance management are the goal-setting theory proposed by Edwin Locke and the expectancy theory proposed by Victor Vroom. The goal-setting theory holds that individual goals established by an employee are what motivate them toward superior performance. When employees achieve their personal goals, they experience a sense of accomplishment that motivates them to pursue the goals of the organization as well.
The expectancy theory, on the other hand, states that individuals tend to adjust their behavior based on the anticipated satisfaction of the goals they set. More specifically, individual performance is influenced by expectations of future events. Consequently, performance management practices must reward employees who improve their performance in order to sustain that behavior.
Elaine Pulakos' book Performance Management: A New Approach for Driving Business Results provided valuable insight into the performance management process and how it should be effectively applied to improve organizational performance. Leeuw and Berg's article "Improving Operational Performance by Influencing Shopfloor Behavior via Performance Management Practices" was also instructive, as it clearly demonstrates how performance management practices lead to better outcomes by influencing employee behavior.
You’re 56% through this paper. Sign up to read the full paper.
Sign Up Now — Instant Access Already a member? Log inAlways verify citation format against your institution’s current style guide requirements.